MUMBAI: India’s recent policy flipflop that hit e-commerce companies may have kicked in to ensure tighter compliance by some industry players who were not conforming with the rules, Amazon India chief Amit Agarwal said.The online retailing behemoth would have preferred more consultations before the FDI rules were announced in December last year, Agarwal told ET in an interview. The piecemeal approach had the potential to hurt the fledgling industry’s growth prospects, he said.
The new regulations, which took effect from February 1, mandated that online retailers with foreign capital could not sell products through companies in which they have an equity interest or push brands and merchants to sell exclusively on their platforms. “There has been a lot of conversation if this was the right policy for the e-commerce industry,” he said. Amazon was directly affected by the new norms as it had to restructure joint ventures with affiliated sellers such as Cloudtail and Appario Retail. “We were compliant even with the new policy, but some of our sellers felt the need to strengthen their compliance so they took off some of their selection for a period of 7-8 days. But, we are back and growing as healthy as before,” he said.
Agarwal, who was speaking on the policy tweaks for the first time since they were implemented, said a small group of disgruntled and motivated voices were unfortunately making the most noise. “We want to ensure that the policy shouldn’t slow down the industry, instead it should be enabling sellers and removing friction on digital marketplaces,” he said.
Six years after entering India, Amazon has seen more new users shop on its platform year-on-year, he said. “The rate at which we are acquiring new customers continues to be as strong as it has ever been and is growing every year. The conversion of settled customers into Prime members and the engagement of Prime customers into super Prime customers is also growing,” Agarwal said.
India was still the fastest-growing market globally for the web retailer’s popular paid membership programme Prime, even after 30 months of launch, he said. “When I look at the next five years, as we try to get to the next 100 million people to shop with us, the first 100 million users will convert into Prime customers,” he said.
The online retailer does not split its Prime membership base country-wise, but it said last year that globally the subscription service had surpassed the 100-million mark. Amazon Pay, Video, Music and Pantry would get the push going ahead, Agarwal said, with Video emerging as a stronger part of engagement for Prime than even shopping.
On the e-tailer’s offline push, Agarwal ruled out hiking Amazon’s stake beyond the current 5% in Shoppers Stop. The focus at the moment was to re-list it online as it had to re-organise to comply with the new norms, he added.
The K Raheja Corp retailer is working to integrate Amazon’s Prime membership in its brickand-mortar stores. Shoppers Stop was the first of a series of investments that Amazon explored in India to bulk up its offline footprint. “There are many ways to consolidate partnerships with a partner,” he said.
Last September, along with Samara Capital, Amazon agreed to buy Aditya Birla Group’s food and grocery chain More, which runs 523 supermarkets and 20 hypermarkets. The transaction was meant to double down on Amazon’s strategy of building its food retail business and groceries, for which it has allocated $500 million. The approach will be to go deeper in the top four cites, Agarwal said.
He, however, declined to comment on the status of the negotiations with Kishore Biyani’s Future Group for a strategic investment.
ET had reported in February that instead of buying into Future Retail, Amazon was exploring a transaction to buy a stake in Future Coupons, a firm owned by Future Group promoter Kishore Biyani. This was to ensure that the retailer was in compliance with the amended foreign ownership rules that bar ecommerce companies from holding shares in entities selling on their platforms.
As internet firms look to increase their transaction base, the web retailer now lets customers make flight bookings in collaboration with travel portal Cleartrip. The move is in line with the ecommerce firm wanting to become more of an all-in-one app enabling various kinds of transactions, as ET reported in its April 10 edition.
Consumer-facing firms such as Amazon, Flipkart, Ola, Paytm and Phonepe, which have wide distribution reach, want to use their user base to provide goods and services across the board, from recharges and flight tickets to mobiles and grocery.
Amazon has a cumulative customer base of around 150 million.
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